Michigan Compliance Manual - Table of Contents INTRODUCTION

Part #
Michigan Compliance Manual - Table of Contents
INTRODUCTION
Chapter 1 - THE LIHTC PROGRAM
100
102
104
106
108
110
112
114
116
Section 1A - LIHTC Overview
What is the Low Income Housing Tax Credit (LIHTC)?
Creation of the LIHTC Program
Overview of the LIHTC Program
Amount of Credit Available for Michigan
Qualified Allocation Plan
The LIHTC Allocation Process
IRS 8609 (Low-Income Housing Credit Allocation Certification)
Major Regulations and Legislation Impacting LIHTC Compliance Monitoring
Regulations for Various Tax Credit Years
118
120
122
124
126
128
130
132
134
136
138
140
142
144
146
148
150
152
154
156
Section 1B - LIHTC Allocation Basics
Eligible Basis
Federal Grants
Minimum Set-aside
Applicable Fraction
Qualified Basis
The Annual Tax Credit Amount
Applicable Credit Percentage
Year of the Credit (Allocation Year)
Placing a LIHTC Project in Service
Credit Period
First Year of the Credit Period - New Construction Projects
First Year of the Credit Period - Acquisition / Rehabilitation Projects
First Year of the Credit Period – Multiple Government Programs
First Year Credit Statement form
Claiming the LIHTC in Years Two Through Ten
Units that Have Never Been Occupied by a Qualified Resident
The Two-Thirds (2/3) Rule
Definition of a Low Income Unit
Project Numbers
Important Periods for LIHTC Projects
158
160
162
164
166
Section 1C - Compliance Overview for LIHTC Projects
IRC Section 42 Compliance and Monitoring Requirement for LIHTC
The Compliance Period
Overview of Compliance Requirements
Regulatory Agreement
Year 15 and After the LIHTC Compliance Period Ends
Chapter 2 - RESPONSIBILITIES
200
202
204
Section 2A - Michigan State Housing Development Authority
The Michigan State Housing Development Authority
MSHDA Website
Michigan Housing Locator
206
208
Section 2B - Owners and Managers of Projects
Owner of LIHTC Project - Responsibilities
LIHTC Record-keeping Requirements for Owners
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212
214
216
218
LIHTC Record Retention Requirements for Owners
Management Company and On-site Personnel - Responsibilities
Development File for LIHTC Projects
Contact Information Must Be Up-To-Date
Nonprofit Participation
220
Section 2C - Owners and Managers of Projects
Michigan Qualified Allocation Plan
222
Section 2D - Other
National Council of State Housing Agencies
Chapter 3 - INCOME QUALIFYING TENANTS
300
302
Section 3A - Overview of Tenant Certification Process
General Overview of Tenant Certification Procedures
HUD Handbook 4350.3
304
306
308
310
Section 3B - Income
Income, Definition of
Gross Income versus Net or Adjusted Income
Projected Income vs. Actual Past Income
Calculating Total Household Income
312
314
316
Section 3C - Mathematical Considerations
Rounding
Ranges and Averaging
Income Projections and Computations
318
320
322
324
326
Section 3D - Assets
Assets
Example of Calculating Income from Assets
Net Family Assets Less than or Equal to $5,000
Asset Certification Form
Disposal (Divestiture) of Assets
328
330
332
334
336
338
340
342
Section 3E - Verifications
Overview of Verification Methods
Third Party Written Verification
Electronic Verification
Oral Verifications
Documenting Why Third Party Verification Is Not Possible
Review of Documents Provided by the Tenant/Applicant
Self-Affiidavit / Sworn Statement
Notifications and Expiration of Verifications / 120 Days
344
346
348
350
Section 3F - Certification Dates
Dates and Deadlines are Important
Move-in Dates and Effective Dates of Initial Certifications
Acq/Rehab Projects – Certifying Existing Tenants
Signature Date on Certifications and Recertifications
352
Section 3G - Recertifications
Overview of Annual Recertifications
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356
358
360
362
364
366
368
Procedures for Recertification
Recertification Effective Dates
Mass Recertifications
Interim Recertifications
Elimination of Recertification Requirement
Annual Self-Certification
Review of Documents with Self-Certification of Income
Recertification Waiver - old procedure
370
372
374
376
378
380
382
Section 3H - Income Qualifying Particular Classes of Residents
Income Qualifying a Development's Employees
Income and Assets of Students
Participant's in Michigan's No Worker Left Behind Program
Certifying Tenants with Zero Income
Unemployed Adult Household Members
Income and Assets of Children
Foster Children and Foster Adults
384
386
388
390
392
394
Section 3I - Particular Types of Income Sources
Part II of the HUD Student Rule: Student Financial Assistance in Excess of Tuition
Child Support Income
Funds Paid to A Former Spouse
Income from Self-Employment or Business Ownership
Anticipated Income
Military Basic Housing Allowance
396
Section 3J - Select Assets
Reverse Mortgages
Chapter 4 - INCOME LIMITS, RENT RESTRICTIONS, AND UTILITY ALLOWANCES
400
402
404
406
408
410
412
414
416
418
420
Section 4A - Income Limits
Overview of Income Limits
Impact of HERA on LIHTC Income Limit Tables
Which Income Limits to Use
Multifamily Tax Subsidy Projects (MTSP) Income Limits
HERA Special Rates / HUD Hold Harmless
Income Limits for Projects located in Rural Areas (National Nonmetropolitan Median Income)
Section 8 Income Limits
Effective Date of Income Limits and Annual Adjustments
Sample Income Limit Table
Income Limits Are Adjusted for Family Size
Minimum Income Requirements
422
424
426
428
430
432
434
436
Section 4B - Maximum Gross Rent
Maximum Gross Rent
Projects Allocated Credit in 1987, 1988, and 1989
Projects Allocated Credit After January 1, 1990
Changes in Rent Limits and Rent Amounts
5% Cap on Rent Increases for Residents
Other Leases Fees and Charges to Residents of LIHTC Units
Gross Rent Floor Election
Rents in MSHDA Direct Loan Projects
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440
442
444
446
448
450
452
454
456
458
460
462
464
466
468
470
472
474
Section 4C - Utility Allowances in LIHTC Projects
Overview of Utility Allowances
Utility Allowance Regulations and Policies
Sources of Utility Allowances for LIHTC Projects
Determining the Appropriate Utility Allowance Source
Utiltiy Allowances for Rural Housing Services Projects (Method #1)
Utility Allowances for HUD Regulated Buildings with LIHTC (Method #2)
Public Housing Authority Estimate (Method #3)
Local Utility Company Estimate (Method #4)
Actual Consumption Method (Method #5)
HUD Utility Schedule Model (Method #6)
Energy Consumption Model (Method #7)
Utility Allowances for MSHDA-Financed LIHTC Projects
Updating Utility Allowances
Adjusting Tenant Rents When Utility Allowances Change
Notification Requirements and Effective Dates
Record Retention and Availability Requirements for Utility Allowance Documentation
Utility Allowance Documentation Form
Sub-metered Units
Additional Notes about Utility Allowances
476
478
Section 4C - Rental Assistance
Section 8 / Rental Assistance
Rural Housing Services - Rental Assistance and Rent Overage
Chapter 5 - HOUSEHOLD COMPOSITION AND DEMOGRAPHICS
500
502
504
506
Section 5A - Overview of Household Composition and Demographics
Determining Household Composition
Changes in Household Composition
The "Totem Pole" Rule
Occupancy Guidelines
508
510
512
514
516
518
520
522
524
526
528
530
Section 5B - Students
Overview of Students
Definition of a Full-time Student
Definition of an Educational Institution
Exceptions to the Full-time Student Exclusion in LIHTC Projects
Student Exception A (Title IV of the Social Security Act)
Student Exception B (Job Training Program)
Student Exception C (Student Previously in Foster Care)
Student Exception D (Single Parent Receiving Welfare Benefits)
Student Exception E (Single Parent with Dependent Children)
Student Exception F (Married Persons who File a Joint Tax Return)
Student Eligibility Certification Form
Part I of the HUD Student Rule - Student Eligibility Guidelines
532
534
536
Section 5C - Elderly
LIHTC - Definition of Elderly
Fair Housing Act - Defintion of elderly
Elderly Projects - Unique Aspects
538
Section 5D - Special Needs / Developmentally Disabled
Persons with Special Needs and Developmental Disabilities
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Permanent Supportive Housing
542
Section 5E - Section 8 and Housing Choice Voucher Recipients
Discrimination Against Section 8 and HCV Participants is Prohibited
544
Section 5F - Citizenship / Legal Residency Requirements
Citizenship / Legal Residency Requirements
546
548
Section 5G - Transient Persons
Transient Persons
Primary Residence
550
552
554
556
558
560
562
564
Section 5H - Other Demographics and Household Composition Issues
Tenants Must Be Member of the General Public
Managers/Employees as Tenants
Live-In Care Attendants
Married Persons Not Living With Spouse
Pregnant Women, Unborn Children, and Children in the Process of Being Adopted
Non-custodial Children / Guests as Occupants
Market-Rate Tenants
Other Demographic and Composition Topics
566
568
570
572
Section 5I - Other Demographics and Household Composition Issues
Fair Housing, Anti-Discrimination, and Reasonable Accommodations Laws
Affirmative Fair Housing Marketing Plan
Michigan Landlord Tenant Law
Local Housing Laws and Building Codes
Chapter 6 - PROCEDURES AND FORMS
600
602
604
606
608
610
612
614
616
618
620
Section 6A - List of Process and Forms
Overview of the Compliance Monitoring Process
The Michigan LIHTC Compliance Manual
Amendments to Compliance Procedures
Compliance Training Workshops
Pre-Occupancy Conferences
Alphabetical List of Forms and Documents
Forms for Certifying Tenant Eligibility
Rental Application
Checklist
Tenant Income Certification (TIC) form
Additional Forms for MSHDA Direct Loan Projects
622
624
626
628
630
632
Section 6B - Lease Agreement
Overview of LIHTC Lease Requirements
Recommended Lease Clauses and Addenda
Good Cause Requirement
Lease Term and Effective Dates
Lease Agreement - Other Housing Programs
Co-signers and Guarantors
634
636
638
Section 6C - Other Documents and Forms
Consent to Release Information / HUD 9887
Birth Certificates
Social Security Cards and Numbers / Alien Registration Numbers
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642
644
Drivers Licenses and Pictures of Tenants
Citizenship Documentation
Other Forms
646
648
Section 6D - Tenant Files
The Tenant/Unit File
Setting Up and Organizing the Tenant/Unit File
650
Section 6E - Fees
Compliance Monitoring Fees
652
654
Section 6F - Soon-to-Be and Newly Placed in Service Projects
Soon-to-Be Placed in Service Projects
Newly Placed in Service Projects
Chapter 7 - COMPLIANCE MONITORING PROCESSES
700
702
Section 7A - Tenant Data Reporting
MSHDA's On-line Tenant Data Reporting System
HUD's Required Tax Credit Data Collection
704
706
Section 7B - Annual Compliance Certifications
Annual Owner Compliance Certifications and Forms for Projects
Annual LIHTC Owner's Certification of Continuing Program Compliance
708
710
712
714
716
718
720
722
724
726
728
730
Section 7C - Tenant File Audits
Overview of Tenant File Audits
General Scope of Tenant File Audits
File Audit Frequency
Number of Files Audited
Scheduling and Preparing for the File Audit
Conducting the Audit
File Audit Report
Owner's Response to the Audit Report
Audit Closeout
MSHDA File Audit Follow-up Actions
Vacancy Reporting
File Audit Noncompliance Correction Fee
732
734
736
738
740
742
744
746
748
750
752
754
756
758
760
Section 7D - Physical Inspections and Physical Condition Standards
Overview of Physical Inspections
Physical Condition Standards
Physical Inspection Frequency
Number of Units Inspected
Scheduling and Preparing for the Physical Inspection
Conducting the Inspection
Hazard Notices
The Physical Inspection Report (PI)
Owner's Physical Inspection Response (PIR)
Corrective Action and Owner Response Deadlines
Reinspections
Owner/Management Agent Failure to Respond
Inspection Closeout
MSHDA Physical Inspection Follow-up Actions
Fees for Physical Inspections
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764
766
768
770
772
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Section 7E - Other Condition-related Topics
Local Health, Safety and Building Code Violations
Capital Needs Assessments (CNAs)
Casualty Losses
Physical Inspections of Rural Development Projects
MSHDA Physical Inspection Waivers
Bed Bugs
Chapter 8 - UNIT-, BUILDING-, and PROJECT-LEVEL RULES
800
802
804
Section 8A - General Requirements
Units Must Be Suitable and Available For Occupancy
Mixed Income Projects
Overview of LIHTC Rules
806
808
810
812
814
816
818
Section 8B - Next Available Unit Rule
Next Available Unit (140%) Rule
Comparable Unit
Failure to Comply with the Next Available Unit Rule
NAUR Applies Separately To Each Building
NAUR - The Applicable Fraction Must Be Maintained
NAUR - Impact on Projects with a 100% Applicable Fraction
NAUR - Transfers
820
822
824
826
828
830
Section 8C - Vacant Unit Rule
Overview of Vacant Unit Rule
Vacant Unit Rule - Reasonable Attempts
Vacant Unit Rule - Impact of Preliminary Reservations
Vacant Unit Rule - Transfers
Impact of Vacant Units on the Applicable Fraction
Treatment of Vacated Over-income, Deeper Targeted, and Market-rate Units
832
834
836
838
840
842
844
846
Section 8D - Deeper Targeting/Agency Covenants
Overview of Deeper Targeting and Agency Covenants
Projects with a 100% Applicable Fraction and One AMGI Level
Projects with a 100% Applicable Fraction and Multiple AMGI Levels
Mixed Income Projects with One AMGI Level
Mixed Income Projects with Multiple AMGI Levels
Changing a Household's AMGI Designation
Notes About Deeper Targeting/Agency Covenants
Scenarios
848
850
852
854
856
Section 8E - Unit Transfers and Temporary Relocations
Overview of Transfers
Unit Transfers - within the same building
Unit Transfers - to a different building
Transfers During The First Year of the Credit Period
Temporary Relocation of Tenants
858
860
862
864
Section 8F- Common Areas and Spaces - Residential and Non-Residential
Common Area Residential Unit
Common Area Unit - Impact on the Applicable Fraction
Common Space (non-residential) - LIHTC projects
Designating a Unit as Common Area
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866
Full-time Security Officer's Unit
868
Section 8G - Non-Transient Use
Units must be For Non-Transient Use
870
Section 8H - General Public Use Requirement
General Public Use Rule
872
874
Section 8I - Community Service Facilities
Community Service Facilities
Police Substation
876
878
880
882
Section 8J - Ineligible Facilities
Ineligible Facilities
Commerical Space in LIHTC projects
Resident-operated Business in LIHTC Units
Owner-occupied units and Cooperatives
Chapter 9 - THE EXTENDED LOW-INCOME HOUSING USE PERIOD
900
902
904
906
Section 9A - The Extended Use Period
The Extended Use Period
Terminating the Extended Use Period
The Three-Year Tenant Protection Period
Qualifed Contract
908
910
912
914
916
918
920
922
Section 9B - Compliance Requirements after Year 15
Lease Agreements and Good Cause Requirement After Year 15 of the Extended Use Period
Income Limits, Rent Restrictions, and Utility Allowance After Year 15 of the Extended Use Perioid
Certifying Tenant Eligibility After Year 15 of the Extended Use Period
Tenant Demographics After Year 15 of the Extended Use Period
Unit-, Building-, and Project-Level Rules After Year 15 of the Extended Use Period
Monitoring Activities After Year 15 of the Extended Use Period
QAP and Allocation Considerations
Consequences of Noncompliance After Year 15 of The Extended Use Period
Chapter 10 - NONCOMPLIANCE AND DISPOSITIONS
1000
1002
1004
Section 10A - Process Overview
Overview of Noncompliance Process
The Three-Year Post-8823 Correction Period
Avoiding Noncompliance
1006
1008
Section 10B - Types of Noncompliance
Types of Noncompliance
Tenant Misrepresentation and Fraud
1010
1012
Section 10C - Consequences of Noncompliance
Consequences
Recapture
1014
Section 10D - Building Disposition and/or Change in Ownership
Overview of Building Disposition and Ownership Changes
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1018
1020
1022
1024
Fee Title Sale of Building / Transfer of Ownership
Change in the Composition of the Ownership Entity
Termination of Partnership
Notifying MSHDA about Building Disposition and/or Change in Ownershp
Limited Dividend Housing Associations (LDHA)
1026
1028
1030
1032
Section 10E - Removal and Withdrawal from the LIHTC Program
Removal from the LIHTC Program
Owner Permanently Withdraws Project from the LIHTC Program
Foreclosure
Destruction
1034
1036
1038
Section 10F - The IRS 8823 Guide and Methods of Correcting Noncompliance
The IRS 8823 Guide
Methods of Correcting Noncompliance
Differences
Chapter 11 - OTHER HOUSING PROGRAMS
1100
1102
1104
1106
1108
1110
1112
Section 11A - Housing Choice Voucher Participants
Qualifying Housing Choice Voucher Participants
Using HUD Forms to Determine LIHTC Eligiblity
Authorization to Release HUD 50058 Form
Dates for Housing Choice Vouchers Certifications
MSHDA's Housing Choice Voucher Program
Enterprise Income Verification (EIV) System - Important Related Information
Additional Information about Housing Choice Voucher and Section 8 Participants
1114
1116
Section 11B - Section 8 Project-Based Tenants for LIHTC Units
Qualifying Section 8 Project-based Tenants for LIHTC units
Dates for Section 8 Project-based Units
1118
1120
1122
1124
Section 11C - Rural Development Projects
Qualifying Tenants in Projects with Rural Development Financing
Effective Dates of RD Certification
Compare/Contrast RD and LIHTC
More Information about RD Projects
1126
1128
Section 11D - Preservation Projects
Preservation Projects - Procedures for Certifying Initial LIHTC Eligiblity
Section 236 Preservation
1130
Section 11E - Second (2nd) Allocations of Tax Credits
Projects Receiving New, 2nd Allocations of Tax Credits
1132
1134
1136
1138
1140
Section 11F - Bonds and MSHDA Direct Loan Projects
MSHDA Direct Loan Programs financed with Tax-Exempt Bonds
Taxable Bond Program
Overview of Compliance Requirements for MSHDA Direct Loan Programs
Compliance Requirements for Tax-Exempt Bond Projects Are Very Similar to LIHTC
Additional Requirements for MSHDA Direct Loan Projects
1142
Section 11G - Pass-Through Program
Regular Pass-Through Program
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Modified Pass-Through Program
1146
Section 11H - HOME Program
HOME Program
1148
1150
1152
Section 11I - 125% AND 150% AMGI
Tenants Occupying Units at 125% AMI and 150% AMI
Certifying Tenants Occupying Units at 125% AMI and 150% AMI
Determining the 125% AMI, and 150% AMGI Income Limits
1154
Section 11J - 125% AND 150% AMGI
80% AMI Income Limits
1156
1158
1160
1162
Section 11K - Tax Credit Assistance Program (TCAP)
Description of the Tax Credit Assistance Program (TCAP)
TCAP - Compliance Requirements
TCAP - Federal Funds Requirements
TCAP - Funding Documents
1164
1166
1168
Section 11L - 1602 Program
Description of 1602 Program
1602 Program - Compliance Monitoring
1602 Program - Funding Documents
APPENDICES
A
Forms for Certifying Project Compliance
Common Area Unit Designation Statement
First Year Credit Statement
Owner Certification of Continuing Compliance
B
Tenant Certification Forms
Asset Certification (under $5,000)
Authorization to Release Information for Section 8 Participants
Checkist
Student Status Verification
Tenant Income Certification (TIC)
C
Policy Statements
Gross Rent Floor Election
Child Support
D
HUD Handbook 4350.3 excerpt
E
LIHTC Compliance Monitoring Regulations
IRS Regulation 1.42-5 (Tax Credit Compliance Monitoring
IRS Regulation (TD 8859) / 26 CFR Parts 1 and 602 (Compliance Monitoring and Miscellaneous Issues
Relating to the Low Income Housing Credit)
F
IRS forms
IRS Form 8586: Low Income Housing Credit
IRS Form 8609 Schedule A: Annual Statement
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IRS Form 8609: Low Income Housing Credit Allocation Certification
IRS Form 8610: Low Income Housing Credit Agencies Report
IRS Form 8611: Recapture of Low Income Housing Credit
IRS Form 8693: Low Income Housing Credit Disposition Bond
IRS Form 8823: Low Income Housing Credit Agencies Report of Noncompliance
H
Qualified Contract Guidelines
I
Forms for Other Gov't Programs
Forms RHS 1944-8 (USDA-Rural Housing Service – Tenant Certification)
HUD 50058
HUD 50059
HUD 9887 and 9887A
K
Compliance Manual Order Form
INDEX
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